PRE-LISTING STATEMENTOFFER FOR SALE

ISIN: MWAIRT001156

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A copy of the Pre-Listing Statement has been delivered to and registered by the Registrar of Financial Institutions (“Registrar”). The Registrar has not checked and will not check the accuracy of any statements and they accept no

responsibility therefore or for the financial soundness of Airtel Malawi Plc (“Airtel”) or the value of the securities offered. The Registrar registered this Pre-Listing Statement on 20 December 2019.

PRE-LISTING STATEMENT

OFFER FOR SALE OF1,650,000,000 ORDINARY SHARES & AN OVER-

ALLOTMENT OPTION OF 550,000,000 ORDINARY SHARES AT MWK 12.69 PER SHARE

DATE OF ISSUE: 20 DECEMBER 2019

Pre-Listing Statement - Con’t

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1. NATURE OF THE BUSINESS Airtel Malawi Plc (“Airtel” or the “Company”) (formerly known as Zain Malawi and before that Celtel Malawi Limited) was incorporated on 3rd September 1998 under company registration number 5114 as a private limited company and trades under the name Airtel. Airtel became the country’s second mobile service provider with the launch of a GSM network in October 1999. The Company began rolling out a GPRS upgrade across its infrastructure in 2006 and a commercial launch of the service took place in October 2007. In September 2007 the operator’s then-parent company, MTC Group of Kuwait, adopted the new name Zain to unify its various brands across Africa and the Middle East. All operations in Sub-Saharan Africa, which were held via MTC Group’s wholly-owned subsidiary Celtel International, were rebranded from Celtel to Zain in August 2008. Following Indian telecoms operator Bharti Airtel’s acquisition of the Sub-Saharan Africa assets of Zain Group in June 2010, the Company underwent another name change – from Zain to Airtel in November 2010. Airtel’s operating licence was renewed by MACRA for a further ten years in early 2014. Airtel was re- registered as a public company on 18th November 2019, with company registration number TMRBS1011981. Airtel provides mobile telecommunication services (GSM Mobile cellular telephone services) including voice telephony, messaging, data communications (including internet), international and national long-distance telecommunications services and “value-added services.

2. ORGANISATIONAL OVERVIEW

2.1 Shareholders

Bharti Airtel Malawi Holdings BV, J.C. Uneken-van de Vreede and Bharti Airtel Africa BV are the shareholders of Airtel.

The table below shows the shareholding of Airtel.

Shareholder Number of shares %

Bharti Airtel Malawi Holdings BV 10,999,879,000 shares 99.999%J.C. Uneken-van de Vreede (nominee) 110,000 shares 0.001%Bharti Airtel Africa BV (nominee) 11,000 shares <0.000%Total 11,000,000,000 shares 100.00%

Bharti Airtel Malawi Holdings BV

Bharti Airtel Africa BV set up a holding company to own the Malawian assets under the name Bharti Airtel Malawi Holdings BV.

The address for Bharti Airtel Malawi Holdings B.V. is at Overschiestraat 65, 1062 XD Amsterdam, The Netherlands.

Bharti Airtel Africa BV

Bharti Airtel Malawi Holdings BV is owned by Bharti Airtel Africa BV, which in June 2010 acquired the Sub-Saharan Africa assets of Kuwait’s Zain Group in a deal valued at USD10.7 billion.

2.2. Airtel Group

The diagram below shows the organogram of Airtel group of companies in Malawi which includes Ownership of Airtel, Airtel Mobile Commerce Limited and Malawi Towers Limited and its related parties as on 31 July 2019. Airtel is part of Airtel Africa Plc which listed on the London Stock Exchange through an IPO in June 2019.

This Pre-listing Statement is not an invitation to the public to buy shares but is issued in compliance with the rules and regulations of the Malawi Stock Exchange (“MSE”) for the purpose of giving information to the public with regard to Airtel.

In respect of:• a Public Offer of 2,200,000,000 Shares at a price of MWK12.69 per Share;• by way of an offer for sale for 1,650,000,000 new Shares issued by the Company being 15% of the issued capital of the Company

and an over-allotment option of 550,000,000 shares for sale representing 5% of the issued capital of the Company;• the subsequent listing of 11,000,000,000 shares being all the shares of the Company on the Domestic Main Board of the MSE;

PRE-LISTING STATEMENT

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AIRTEL GROUP

Profi le of Affi liate Companies Malawi Towers Limited Malawi Towers Limited (“MT”), is an affi liate of Airtel and is 99.999% owned by Bharti Airtel Malawi Holdings BV, with a 0.001% by Ms Uneken-Van de Vreede. MT owns telecommunication sites, and telecommunications infrastructure and equipment. By a master tower sharing agreement dated 5th September 2014, MT provides Airtel, as well as other telecommunications operators in Malawi, access to telecommunication sites, telecommunications infrastructure, equipment and support services. Airtel pays MT a market rate for using such assets and services. Airtel currently owns 90 towers and is at an advanced stage of discussion of selling these passive assets to Malawi Towers Limited before 31st December 2019.

Airtel Mobile Commerce LimitedAirtel Mobile Commerce BV owns 100% of Airtel Mobile Commerce Limited (“AMCL”) directly and indirectly. AMCL provides Airtel Money services in conjunction with Airtel. With eff ect from 1st January 2019, Airtel transferred its tangible assets of the Airtel Money business to AMCL. Airtel agreed to provide management and technical services to AMCL.

2.3. Airtel’s Vision and Mission Statements Vision StatementOur vision is to enrich the lives of our customers. Our obsession is to win customers for life through an exceptional experience.

2.4. Airtel ValuesAirtel has three values that drive its business: Alive, Inclusive and Respectful (AIR)

AliveWe act with passion, energy and a can-do attitude. Innovation and an entrepreneurial spirit drive us.

InclusiveWe champion diversity. We anticipate, adapt and deliver solutions that enrich the lives of the communities we serve.

RespectfulWe share the joy and pain of our customers. We act with humility and are always open and honest

Pre-Listing Statement - Con’t

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3. PRODUCTS AND SERVICES Airtel offers products and services that cater to the needs of its subscribers. Airtel’s current subscriber base consists almost exclusively of prepaid subscribers, who accounted for approximately 99% of the Company’s total subscriber base as of 31 December 2018. In December 2014, Airtel had approximately 3.1 million subscribers and by December 2018, this figure grew to 4.02 million translating to approximately 28.4% growth in subscriber base. With Malawi being an emerging market with average disposable income of USD385 p.a. Airtel’s prepaid customers tend to have lower disposable income and typically generate lower ARPU. Although, Airtel’s post-paid customers who are corporate and small-to-medium-size enterprises, represent only 1% of total subscriber base, they generate higher ARPU and typically have lower churn rates.

Given the subscriber make-up, Airtel’s main products and services portfolio aims principally to cater for the needs of the price conscious pre-paid market. For this market, Airtel offers paper and electronic recharge vouchers of wide-ranging denominations, affordable voice tariffs with per second billing, Internet Services, SMS, USSD, one network, Airtel Money, Loyalty Programmes, and affordable SIMs.

Airtel has also developed select products and services for the postpaid market who use the service and pay at the end of the month

Special products that cater specifically for the needs of the postpaid and enterprise subscribers include Corporate prepaid and Postpaid, Broadband, Closed User Group (CUG), Contract Handsets, Private APNs, Toll Free Services and Roaming packages.

3.1. Prepaid Products Airtel Zone: This service provides discounted rates to Airtel subscribers to any local number. The discount depends on the time and area where the calling party is located. The Airtel Zone base rate is currently at MWK103 per minute to all networks. This service contributes more than 40% of Airtel’s gross revenue.

Data: Airtel provides quality and reliable internet connectivity on 2G, 3G & 4G LTE. 4G speeds are almost ten times faster than 3G speeds and provide a more stable internet connectivity that enables one to make video calls, bringing more efficiency in jobs that require uploading and downloading of materials on the internet. Over the years the contribution to revenue from data services has grown from less than 2% in 2010 to almost 20% in 2018.

SMS: Short Messaging Service is amongst the most popular services for Airtel subscribers. This is a reliable, discrete and convenient messaging service used by all categories of customers and with all types of handsets. Airtel currently offers one of the most competitive rates for SMS in the country. SMS contributes more than 4% of Airtel’s gross revenue.

VAS: Airtel offers a wide range of Value-Added Services (VAS) through SMS and USSD. One of the most used of these services on the Airtel network is Kutapa which is available to prepaid mobile users to facilitate advance on airtime payable on the next recharge. Subscriber pays 10% of borrowed amount on next recharge. VAS on Airtel contribute more than 2% of the revenue.

Loyalty Programme: This is a usage bonus that Airtel offers to its loyal customers by giving 10% bonus payout based on previous month usage. Customers need to use at least MWK1000 in order to qualify for the bonus. Bonus may be used for on net voice, SMS and Data. Airtel Zone rates apply for bonus calls. The bonus is valid from 14th of the month till the last day of the month.

3.2. Postpaid Products

Contract Packages: Airtel contract customers are offered a choice of several bundled offers comprising attractive handsets and competitive Voice, Data and SMS rates usage plans for a fixed monthly fee over a specified period.

Closed User Group: This is a solution that is provided to Corporate and Small and Medium Enterprise (SME) clients). The purpose of CUG is to offer discounted rates on communications made between/among members of the same group. CUGs have been created for both postpaid and prepaid.

3.3. Business and Enterprise Products

Broadband: Airtel Broadband provides a complete suite of office connectivity solutions from high quality full internet services to virtual private network connectivity and from fixed line to office internet to mobile data on dongles and Wi-Fi dongles.

Private APNs: A private APN (Access Point Name), is a point of entry onto an IP network for a mobile device. This product allows corporate customers to connect to their corporate network simply and securely.

Toll Free services: The Toll-Free Service allows for service-oriented enterprises to have their customers on the Airtel network to call them free of charge. The enterprise (e.g. taxi companies, banks etc.) is then charged for the total number of calls against their toll-free number at very competitive tariffs.

3.4. One Network, International and Roaming

International Voice: All Airtel subscribers that have international dialing service provided on their phones can make direct international calls abroad at competitive rates since the commissioning of Airtel’s international gateway.

Airtel One Network: Typically, it is expensive to call home while roaming in a foreign country but with Airtel One Network service, Airtel subscribers both prepaid and postpaid carry their home tariff anywhere they travel to a country with Airtel. Subscribers call the local network at local rates instead of higher roaming rates.

Roaming Coverage: Airtel continues to sign on new global roaming partners enabling Airtel subscribers to access services on their Airtel mobile number when they travel overseas. International subscribers are invited to enjoy Airtel services via a welcome back message upon arrival at Malawi’s international airports.

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4. SELECTED FINANCIAL INFORMATION The following three-year financial performance figures have been extracted from the Reporting Accountant’s Report by Deloitte in Annexure 4 and appear in abridged form without explanatory notes. Deloitte have been the auditors of Airtel for years ended 31 December 2017, 31 December 2018 and six months ended 30 June 2019 and have reported on the annual financial statements of the Company without qualification. Ernst and Young were auditors of Airtel for the Year ended 31 December 2016 and also reported on the financial statements without qualification. Potential investors should refer to supporting accounting policies and notes in Annexure 4 in order to obtain a full appreciation thereof.

Pro forma financial informationPrior to 2019, Airtel comprised the GSM business and the Mobile Money business. Following a directive from the Reserve Bank of Malawi, the Mobile Money business has, from 1 January 2019 operated in a separate company. Airtel sold the assets of the Mobile money business to its shareholders and it does not have any shareholding interest in this company. The Company that is to be listed will therefore not include the Mobile money business. The pro forma financial information has been prepared to illustrate the financial performance of Airtel for the three years ended 31 December 2016, 31 December 2017, 31 December 2018 excluding the operations of the Mobile Money (as if the directive had come into force on 1 January 2016) and its assets and liabilities on 31 December 2018 and 31 December 2017.

4.1. Abridged Pro forma 3 years Income Statement ending 31 December 2018 and Audited Income Statement for the 6 months period ended 30 June 2019:

MWK’ million Jun 19 Dec 18 Dec 17 Dec 16

Revenue 41 230 84 741 77 479 70 998

Operating costs (25 963) (49 542) (47 832) (51 580)

Gross Profit 15 267 35 200 29 646 19 418

Depreciation and amortization (6 039) (11 323) (12 998) (11 567)

Foreign Exchange gain/ (loss)* (4 045) (649) 519 (4 176)

Interest expenses (455) - - -

Waiver of loan** - (19 087) - -

EBITDA 16 824 37 204 31 519 21 047

Profit from operating activities 4 728 4 141 17 167 3 675

Other operating loss (81) (25) (33) (309)

Interest income 107 4 057 5 277 4 549

Finance costs (1 216) (3 637) (4 964) (5 588)

Profit before taxation 3 539 4 537 17 447 2 327

Taxation (1 523) (6 895) (7 071) (263)

Profit/(Loss) after tax 2 016 (2 358) 10 376 2 064 *1H 2019 incurred a MWK4bn foreign exchange loss on USD loans due the depreciation of the MWK.

** The amount of MWK19 billion is a one-time foreign exchange loss that relates to an amount that was receivable from Malawi Towers Limited and that Airtel waived in the 2018 reporting period. This amount accrued on account of revaluation of unpaid balances and interest thereon that Malawi Towers Limited, owed Airtel on sale of towers in 2014.

Pre-Listing Statement - Con’t

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4.2. Abridged Pro forma Statement of Financial Position as at 31 December 2017 and 31 December 2018 and Audited Statement of Financial Position as at 30 June 2018

MWK’ million Jun 19 Dec 18 Dec 17

ASSETS

Non-current assets

Property, plant and equipment 56 049 50 692 33 730

Intangible assets 826 3 388 3 775

Right of use assets 8 226  14 953 17 644

Deferred tax assets 6 422 6 316 13 212

Other noncurrent assets 45 45 45

Investment – long term 81 81 -

Total Non-current assets 71 657 75 475 68 406

Current Assets

Inventories 126 98 -

Amounts due from related parties 22 373 18 395 76 841

Trade and other receivables 21 258 11 869 12 419

Income tax recoverable 4 416 5 247 -

Cash and cash equivalents 4 459 1 033 2 641

Total Current assets 52 632 36 642 91 901

Total assets 124 281 112 117 160 307

EQUITY AND LIABILITIES

Shareholders’ equity

Share capital 1 1 1

Share premium 398 398 398

Retained earnings 1 459 4 624 22 988

Total Shareholders’ equity 1 858 5 029 23 388

Non-current liabilities

Borrowings-Bharti Airtel Malawi Holdings BV 14 371 13 881 41 758

Lease liabilities 13 040 10 735 12 765

Derivative financial liability - - 88

Borrowings – Bank of America - 29 159 -

Total Non-current liabilities 27 411 53 775 54 611

Current liabilities

Borrowings – Bank of America 30 793 108 -

Borrowings-Bharti Airtel Malawi Holdings BV 258 246 16 659

Amounts due to related parties 16 968 9 545 35 537

Lease Liability 1 313 2 076 1 928

Trade and other payables 43 020 32 675 21 388

Provisions 1 062 394 491

Dividends payable 1 560 8 269 2 565

Income tax payable - - 3 697

Total current liabilities 95 012 53 313 82 308

Total liabilities 122 423 107 088 136 919

Total equity and liabilities 124 281 112 117 160 307

The company made a profit after taxation of MWK2.0 billion for the 6 months period ended 30 June 2019 (2018: loss of MWK 2.3 billion for the 12 months period). As at 30 June 2019 the company had current liabilities of MWK95 billion (31 December 2018: MWK53 billion) against current assets of MWK53 billion (31 December 2018: MWK41 billion).Therefore the company was in net liability position of MWK42 billion as of 30 June 2019 (31 December 2018: MWK12 billion). These conditions indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern.

However, the Directors are of the opinion that the company is a going concern on the basis that the company: -

a. Will generate cash inflows from operations of at least the amount projected in the management’s annual operating plan. The generation of sufficient cash flows from operations is driven by and is dependent on management achieving operational targets on subscriber numbers, churn rate and average revenue per user;

b. Will obtain some funding from the third parties; and

c. The company will be able to obtain from the shareholders any additional funding required to meet its obligations as and when they fall due. A commitment to this effect from the shareholders has been obtained by the company.

The Directors are confident that the funds described above will be available to the company to support its obligations as required and that it is therefore appropriate to prepare the financial statements on a going concern basis.

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4.3. Profi t forecast for the years ending 31 December 2019 and 31 December 2020

MWK’ million Dec 2019 Dec 2020

Gross revenue 93,455 107 034

Operating expenses (53 891) (59 442)

Gross Profi t 39 564 47 591

Depreciation and amortization (12 354) (13 095)

EBITDA 41,840 50,273

EBITDA margin 47.4% 48.8%

Profi t from operating activities 27 211 34 496

Other income 1 965  -

Finance expenses (2 961) (1 782)

Profi t before tax 26 214 32 714

Income tax expense (8 126) (10 141)

Profi t for the year 18 088 22 573

Capex 22 582 14 275

These projections have been generated based on certain assumptions. Actual results achieved may diff er from those projected.

4.4. Assumptions underlying the profi t forecasts

Airtel Malawi Plc has prepared the above profi t forecasts for 2019 and 2020 based on the following assumptions:

1. Revenue is projected to increase by 10 % and 15% in 2019 and 2020 respectively. This will mainly be driven by subscriber growth.

2. The entity will expand its investment in distribution and network infrastructure through investment in sites.

3. Data usage is projected to grow annually by 77%. This will mainly be driven by network expansion through broad band base stations.

4. Operating expenses are expected to grow in line with headline infl ation rate of between 10% and 15%.

5. Capital expenditure is projected to be at an average of 20% of gross revenue in 2019 and 2020.

6. The eff ective tax rate is assumed fl at at 31 % of profi t before tax.

7. The sale of towers to a related party for MWK1.9 billion will go through before 31 December 2019.

5. OPERATING REVIEW

5.1. Subscriber growth

Airtel’s subscriber base has grown by a CAGR of 5% from 2015 to 2018. The growth has been driven by aggressive sales and marketing campaigns targeted at the mass market and expansion of network coverage to increase population penetration.

The growth in subscriber numbers since 2015 is illustrated below: -

Source: Company – based on 90 days subscribers

5.2. ARPU

ARPU is infl uenced by several factors: the price and usage of mobile services, subscribers’ spending power and periodic changes to retail tariff s.

2016 2017 2018

Average monthly Gross ARPU (MWK) 1 840 1 969 2 107

Average Voice monthly ARPU (MWK) 1 452 1 495 1 520 Average Data QREC monthly ARPU (MWK) 1 616 1 787 1 951

Source: Company, ARPU based on 30 days active subscribers. QREC is data customer that uses at least 1MB in a month.

The growth in ARPU is primarily a result if increased data usage as Airtel expanded its 4G network and the usage of smart phones increased among its customer base.

3.50

Pre-Listing Statement - Con’t

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5.3. Network coverage and infrastructure

Airtel’s network coverage targets are set out in Airtel’s Licence and are required to cover urban areas (including Blantyre, Lilongwe, Zomba & Mzuzu) as well as semi urban and rural areas, where Airtel’s obligations extend to the provision of community service telephones.

Airtel has deployed 2 main microwaves backbone rings covering the major cities; between Blantyre and Lilongwe and between Lilongwe and Mzuzu. The microwave backbone rings support the major data and voice traffic for all the regions towards the core network in Blantyre.

Airtel has existing fiber backbone infrastructure of 1,506 km covering the major cities of Blantyre and Lilongwe and Lilongwe and Mzuzu. The fiber infrastructure is both own build (614 km) and leased (892 km).

Further Airtel has metro fiber rings and microwave rings in the major cities of Lilongwe (52 km) and Blantyre (52 km). The fiber infrastructure supports the 2G, 3G and 4G site traffic. It is built for resilience and capacity scalability.

5.4. Footprint of National Coverage

In 2017 Airtel launched its network modernization project spending more than MWK35 billion. This investment culminated in the launch of 4G in January 2018. Currently, Airtel has the widest 4G network in Malawi.

The map below provides an overview of Airtel’s telecommunications coverage as at 31 December 2018. Airtel intends to further expand the 4G coverage in the country to improve customer experience on data.

An illustration of Airtel’s existing 2G,3G & 4G coverage across Malawi, marked in red appears below:

2G Coverage 3G Coverage 4G Coverage

85% population covered 85% population covered 76% population covered

5.5. Malawi Communications Authority (“MACRA”)

MACRA is the independent national regulatory watchdog for the telecommunications industry in Malawi. It is responsible for the regulation and monitoring of communication services; issuing, suspending and revoking licences; protecting interests of customers and promoting efficiency and regulating competition amongst market players. MACRA’s objectives and goals are aligned with international best practice.

6. IMPORTANT OFFER INFORMATION

6.1. Purpose of the Offer and Listing

The Offer will enable the Company to comply with Section 35 of the Communications Act of 2016, Regulation 26 (2) of the Communications Act (Telecommunications and Broadcasting Licensing) Regulations of 2016 and Clause 42.2 of the Company’s operating licence, which requires the Company to have 20% local Malawian shareholding. Through this Offer, the Company demonstrates its commitment to contributing to the growth and development of Malawi and envisages that Malawians will be encouraged to share in the growth of Airtel and participate in Malawi’s Capital Markets

The Company believes that the Offer may also:

· enable improved access to capital markets, thereby strengthening the Company’s ability to successfully execute its strategy;

· further enhance the Company’s profile with its various stakeholders; and

· create liquidity for trading Shares for existing and new Shareholders on the MSE

6.2. The Offer

The Offer comprises an initial public offer (IPO) to primarily Malawians. Airtel’s Shareholders are offering 1,650,000,000 shares for sale with an additional 550,000,000 shares through an Over-allotment Option upon terms and conditions set out in this Prospectus and the Application Form.

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All the Offer Shares will rank pari passu in all respects with the shares in issue as at the date hereof.

6.3. Offer Summary

Total number of authorised Airtel Shares 11,000,000,000

Shares in issue and fully paid by existing shareholders 11,000,000,000

Total Airtel Shares for sale to the public 2,200,000,000

 Offer for Sale for 15% of Airtel Shares 1,650,000,000

Over-allotment Option for 5% of Airtel Shares 550,000,000

Offer Price per share MWK12.69

% of the total share capital of the Company offered to public 20%

Gross value of the Offer 27,918,000,000

Market capitalisation at the Offer Price  139,590,000,000

6.4. Use of Proceeds

The sale of 2,200,000,000 ordinary shares at MWK12.69 each will raise MWK27.92bn before expenses. Proceeds from the Offer after IPO expenses will be paid to the major Shareholder.

6.5. Key Investment Highlights

The offer presents a unique opportunity for Malawians, including customers of the Company, to share in the Company’s growth prospects.

The following are key investment highlights:

a. Airtel is the leading mobile telecommunications operator in Malawi

• Since overtaking its main competitor in 2005, Airtel has maintained its top market leader position based on share of subscribers. As at December 2018 the company had over 4.02 million subscribers and a market share of approximately 54.1%;

• In 2018, Airtel was named the “Most Popular Brand” in Malawi by Milward Brown a global leader in brand strategy consulting, advertising development and brand equity research;

• Airtel’s infrastructure provides mobile coverage to about 85% of the population and is available in all main towns and their surrounding areas, as well as an increasing number of villages and rural locations;

• It has the widest 3G and 4G networks. As of 30th September 2019, 754 of Airtel’s 758 sites had 4G LTE.

b. The company has a demonstrable track record of strong operational performance, ensuring it remains a market leader

• Airtel is a consistent leader in innovation and product diversification:

• First telecommunications operator to provide mobile data services and mobile wallet services in Malawi;

• Introduction of innovative products such as “Per second billing”, “BlackBerry”, “Mobile top up”, “location-based charging”, “One Network”, “Please Call Me”, “Me2U”, and “Bundles”

• Through the continuous investment in its infrastructure, Airtel has demonstrated an ability and capability to execute on often complex rollouts across the country;

• Airtel leverages off its affiliate company, Airtel Mobile Commerce Limited which offers Airtel Money services. Airtel Money is the preferred mobile money services provider with the widest agent network of 17,000 active agents; and

• The Company has achieved strong growth in data revenue

• Year on year growth of 40% as at December 2018 in data revenue; and

• Over 910,000 30-day active data users as of 31 December 2018.

c. Attractive Growth Prospects in Malawi’s Telecommunication Industry

• Malawi’s mobile and data penetration rates are well below those of Africa, providing a potential opportunity of growth for Airtel:

• At 42.3%, Malawi’s penetration rate is significantly lower than the African mobile penetration rate of 83.13% as at December 2018;

• Africa’s mobile penetration rate is expected to grow to 89.7% by December 2019;

• It is estimated that mobile subscribers in Malawi will grow at an annual growth rate of 4% to reach 9.9 million in 2023 achieving an estimated 45.1% penetration rate;

• High mobile data prospects with only 19.65% penetration in Malawi as at December 2018 and expected growth to 23.41% by December 2019;

• The Africa average for mobile data penetration is currently at 38.82%, and expected to grow to 45.60% by December 2019.

• Malawi has a burgeoning population below the age of 25 years which is approximately 65% of the population. Combined with the proliferation of smartphones and smartphone needs, this will likely drive an increased demand for data products; and

• There is still spectrum available since Malawi has about 431.6 megahertz (Mhz) of unallocated spectrum in the bands for 600Mhz, 700Mhz, 800Mhz, 900Mhz, 1800Mhz, 2100Mhz and 2300Mhz. These unallocated spectra once released, would potentially allow mobile broadband penetration to grow and help Airtel improve its network experience.

d. Airtel is well positioned to benefit from the growth of Malawi’s Telecommunications Industry

• Airtel’s key growth drivers are investment in its 4G network, wireless broadband and enterprise offering which will offer a better network experience for subscribers;

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• Airtel has invested extensively in advanced communication infrastructure. Through its innovative offerings and an experienced management team it has grown to offer improved voice, data and digital services to its customers. This has ensured that the Company is well positioned to benefit from the potential future growth of the industry; and

• As part of the Airtel Group of Companies - a leading telecoms operator in Asia and Africa that operates in 18 countries – Airtel has access to leading technical and operational expertise and is thereby able to offer technologies and services at global standards that provide Malawians with an easy and dependable way to connect to the world.

e. Compelling Financial Performance

2016 2017 2018 1H 2019 2019f 2020f

Revenues MWK’mn 70 998 77 479 84 741 41 230 93 455 107 034

EBITDA MWK’mn 21 047 31 519 37 204 16 824 41 840 50 273

EBITDA Margin % 29.6% 40.7% 43.9% 40.8% 44.8% 47.0%

PAT** MWK’mn 2 064 10 376 (2 358) 2 016 18 088 22 573

CAPEX MWK’mn 10 359 13 337 26 540 10 751 22 582 14 275

**Loss arising from a one-time foreign exchange loss of MWK19bn due to revaluation of unpaid balances and interest thereon that Malawi Towers Limited, owed Airtel Malawi Plc on sale of towers in 2014. In 1H 2019, Airtel incurred a MWK4bn foreign exchange loss on USD loans due the depreciation of the MWK.

• An attractive return profile with a 2018 revenue growth of 9.4% year on year;

• Strong earnings with EBITDA of MWK37 billion representing an 18% growth from December 2017 to December 2018 and an EBITDA margin of 43.9%. A strong earnings outlook with EBITDA margins moving towards 47.0% in 2020; and

• Impressive growth in capital expenditure at 99% year on year in 2018 and a forecast average of 18.8% of revenue in 2019 and 2020 demonstrating Airtel’s commitment to stay ahead with state-of-the-art technology and a reliable network.

f. Experienced Management Team

• Strong management team with extensive industry knowledge combined with years of collective telecommunications experience; and

• Being part of the Airtel Group of Companies provides Airtel with access to leading technical and operational expertise including over 23 years’ experience operating across Asia and Africa.

6.6. Dividends

The Company aims to distribute to its shareholders a dividend payout of minimum 80% of its free cash flow (FCF), subject to:

• Keeping net debt/EBITDA between approximately 2.5 times and 3.5 times (current net debt/EBITDA as at 30 June 2019 is 3.29 times); and

• Any regulatory or statutory restrictions.

The Board will have the discretion to deviate or amend this policy by giving reasons thereof. This Policy shall be reviewed at least once every year.

The dividend will be declared at the Annual General Meeting held in May or June each year. All dividends will be payable approximately 21 days after declaration.

When deemed appropriate, the Board may consider paying interim dividends from time to time. The dividend will be paid to registered shareholders appearing in the shareholder register on the declared date of registration for dividend.

Dividend type Event Period TermsInterim dividend Declaration Mid-August When deemed appropriate

Closing transfer register End-August When deemed appropriate

Payment Early September When deemed appropriate

Final dividend Declaration End April

Closing transfer register Mid May

Payment End May

6.7. Minimum subscription

The minimum subscription required to satisfy the minimum listing criteria as prescribed by the MSE is 30 million shares of an offer value of MWK500m and a minimum of 300 shareholders.

6.8. Multiple applications

Multiple applications are strongly discouraged. Directors, at their sole discretion may reject multiple applications.

6.9. Movement in the authorised share capital

The following table illustrates the changes in Airtel’s (authorised share) capital for the past 5 years: -

Ordinary shares Nominal value per share (MWK) Nominal value total (MWK)

Authorised share capital

Opening balance 1,000,000 1.00 1,000,000

Corporate actions 11,000,000,000 1/11000 1,000,000

Share split 1:11,000

Increase in share capital 10,999,000,000 -10,999/11,000 Nil

Total authorised and issued share capital 11,000,000,000 1/11,000 1,000,000

Airtel was incorporated with an authorised share capital of MWK1,000,000 which were originally issued at a nominal value of MWK1.00 per share. A share split was effected at a ratio of 1:11,000 to increase the total number of authorised shares to 11,000,000,000 which have all been issued.

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The shares in terms of the IPO will be issued at a premium of MWK12.69 per share to reflect the past and future earning capacity of the business.

6.10. Controlling shareholder

Assuming the IPO is fully sold Airtel’s shareholders pre- and post-IPO will be as follows: -

Shareholder Before the Offer After the OfferNumber of shares % Number of shares %

Bharti Airtel Malawi Holdings BV 10,999,879,000 99.999% 8,799,879,000 79.999%

J.C. Uneken-van de Vreede 110,000 0.001% 110,000 0.001%

Bharti Airtel Africa BV 11,000 <0.000% 11,000 <0.000%

Public - - 2,200,000,000 20%

Post the IPO Bharti Airtel Malawi Holdings BV will have 79.999% direct interest in Airtel.

6.11. Application for Shares

Applications for the IPO may be made on the Application Forms enclosed in the Prospectus. Scanned soft copies of the Application Forms with corresponding payment will also be accepted for submission. Applications must be made in accordance with the terms and instructions set out in the Application Forms. Applications can also be done using the Airtel Money on any mobile phone device. Only Airtel subscribers that are registered and fully completed their KYC on Airtel Money can use the platform to apply for shares in the IPO. The Airtel Money module once logged in takes applicants through a step by step process of applying for shares.

6.12. Allocations and Payments

Preferential entitlement – Airtel Employee Share Ownership Scheme (ESOS)

A preferential entitlement, in aggregate, of up to 165,154,204 ordinary shares worth MWK2,095mn representing 1.5% of Airtel’s issued share capital post-issue of the Offer Shares and representing 7.5% of the total shares on offer has been set aside for to full time permanent employees of the Company. Prior to the IPO no employees had any beneficial interests in Airtel’s share capital.

Allotment policy based on subscription

Airtel Shares available in respect of the Initial Public Offer for the Offer for Sale of 15% and the over-allotment option of 5% of Airtel shares will first be allocated to Malawians on a pro-rata basis, and thereafter to other shareholders on a pro-rata basis.

In the event of an undersubscription, underwriters will pick up outstanding shares up to 15%. Preferential entitlement by Airtel employees under ESOS will not form part of the 15% Offer for Sale. Employees will thereafter be allotted shares above the 15% in line with the number of employees that have taken up their preferential entitlement.

In the event of an oversubscription, Airtel employees will still be given preferential entitlement and allotted shares prior to other applicants under the over-allotment option. Any other outstanding subscriptions will be thereafter allotted after all employees that applied for shares have been allotted. Outstanding over-subscribed Shares will be allotted at the sole discretion of the Directors and do reserve theright to amend the allotment policy as deemed fit having regard to the achievement of a broad and balanced Malawian shareholder base after consultation with the relevant advisors listed.

Multiple applications are discouraged, and the Board has resolved to adopt a share allotment policy that negates the benefits of multiple applications. Multiple applications may be rejected at the sole discretion of the Directors.

The Offer Price is payable in full, in Kwacha as per the terms and conditions indicated on the Application Form.

The Offer Shares and over-allotment shares will, upon allotment, rank in all respect equal with all other existing ordinary shares in terms of both voting rights and dividends.

Notice of the results of the IPO will be published no more than 14 days after the close of the Offer, and notices of the results of the applications and allocation of shares will be completed within 17 days of the close of the Offer. Where applicable, refunds will be sent within 17 days of the close of the Offer.

6.13. Underwriting

The Offer of 1,650,000,000 Shares is fully underwritten for a commission totaling MWK244.28m. The underwriters have no interest in the Company.

The individual underwriting commitments of the Underwriters are disclosed below.

Underwriter Number of Shares Amount underwritten (MWK) % of IPO SharesOld Mutual Investment Group Limited 1 100 000 000 13 959 000 000.00 66.67%

NICO Asset Managers Limited 293 892 829 3 729 500 000.00 17.81%

National Bank of Malawi Plc 256 107 171 3 250 000 000.00 15.52%

Total 1 650 000 000 20 938 500 000.00 100.00%

6.14. Important Dates and Times The Public Offer opens at 08:00 a.m. on 27th December 2019 and is expected to close at 17:00hrs on 31st January 2020. Applications will be received up to 17.00hrs on 31st January 2020 Any material changes will be released on MSE’s publications, the Company’s website and published in one of the daily newspapers in Malawi.

Event Date

Offer opens – Publication of Prospectus 27 December 2019

Last day for application; Offer closes 31 January 2020

Results of the offer submitted to the MSE Committee 11 February 2020

Results announcement 14 February 2020

Refunds sent to applicants 17 February 2020

Securities listed (if listing granted). The listing day shall fall on a Monday 24 February 2020

Pre-Listing Statement - Con’t

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7. DIRECTORS

7.1. List of Directors

The full names, qualifications, nationalities, address and occupations of Airtel’s Directors are set out below:-

Name Nationality Occupation and Other directorships Business and Residential address

Plastone Alex Chitsime Malawian Non-executive Director and Chairman MCC Limited & NICO Technologies Limited

4, Wilson Road, Sunnyside Road, Lilongwe

Charles Mustafa Kamoto Malawian Managing Director Airtel Mobile Commerce Limited Malawi Towers LimitedMalawi Agricultural and Industrial Investment Corporation (MAIIC) Ac Investment Limited

Airtel Malawi PlcAirtel Complex City Centre Off Convention DriveP.O Box 57 LilongweMalawiPlot N0. 43/595, Lilongwe

Alok Bafna Indian Non-executive DirectorAirtel Uganda Limited Airtel Networks Kenya Limited Airtel Rwanda Limited Airtel (Seychelles) Limited Airtel Mobile Commerce Uganda Limited Airtel Money Transfer Limited- (in Kenya) Airtel Mobile Commerce (Rwanda) Limited Airtel Mobile Commerce (Seychelles) Limited

C/o Airtel Africa, Sixth Floor, the Oval, Ring Road Parklands, P.O. Box 962-00100, Nairobi, Kenya Mac Garden Apartments, Othaya Raod, V N0. A-8, Nairobi, Kenya

Ian Ferrao British Non-executive DirectorAirtel Africa – Regional Director Eastern Africa

C/o Airtel Africa, Sixth Floor, the Oval, Ring Road Parklands, P.O. Box 962-00100, Nairobi, Kenya House No.7, Clifton Villas, L.R No.- 7158/608.

Neelesh Pratap Singh Indian Non- executive Director Airtel Networks Zambia PLC

C/o Airtel Africa, Sixth Floor, the Oval, Ring Road Parklands, P.O. Box 962-00100, Nairobi, Kenya Brookeside Drive, Jambo, Valley Apartments, Town House 22, Nairobi

Kayisi M’bwana Sadala Malawian Non-executive Independent DirectorBoard Chairman Lilongwe Water Board

C/o Mr. K. Sadala, P.O. Box 2299, Blantyre, Malawi Area 9, Lilongwe, Malawi

7.2. Disclosures relating to Directors

The following are disclosures relating to directors:

a. As at the date of the prospectus, none of the Directors hold any share in Airtel.

b. None of the other Directors hold any share options or income notes in Airtel.

c. None of the Directors has direct or indirect material beneficial interest in any material transactions entered into by Airtel in the last 2 years.

d. Other than the Managing Director, no other Director is employed by Airtel on a fixed term contract or on a permanent employment basis.

e. There is no existing or proposed contract between any of the Directors and Airtel.

f. No payment has been made to any director preceding the date of the issue of the prospectus as an inducement to become a director.

g. Directors are permitted to make direct and indirect applications for shares offered in the IPO but will not receive any preference in the allotment process.

h. There is no existing or proposed contract between any of the Directors and the Company.

i. No Director currently has entered into or has had any, direct or indirect, beneficial interest in material contracts entered into for the three preceding years.

j. Details of other directorships and physical and postal addresses of Directors are shown in Section 7.1.

k. There are no material loans or guarantees outstanding to any Director of Airtel.

l. No options to purchase any securities of the Company have been granted to or exercised by a Director within the preceding year.

m. No pension or compensation for loss of office is payable to any Director.

n. In the opinion of the Directors, Airtel’s working capital and its stated capital are adequate to meet its requirements in the foreseeable future.

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8. DISCLOSURES RELATING TO THE COMPANY

8.1. Documents available for inspection

Copies of the following may be inspected at the head office of Airtel by prior arrangement with the Company Secretary during usual business hours on any business day, for 28 days from the date of this Prospectus:

a. Airtel’s memorandum of association and articles of association;

b. Airtel Malawi Limited’s memorandum of association and articles of association;

c. The Certificate(s) of Incorporation and registration;

d. Management and Technical Services Agreement dated 26/11/2015 between Bharti Airtel International (Netherlands) B.V. and Airtel and first Addendum dated 4/12/2017 to the Management and Technical Services Agreement dated 26/11/2015

e. Framework Loan Agreement dated 15/4/16 and made between Bharti Airtel Mw Holdings BV and Airtel and Amendment dated 29/8/2017 to the Framework Loan Agreement dated 15/4/16;

f. Asset Purchase Agreement dated 2019 and made between Airtel and AMCL;

g. Management Support Service Level Agreement 2019 and made between Airtel and AMCL;

h. Master Tower Sharing Agreement dated 5/9/2014 and made between Airtel and MT;

i. Underwriting agreements with Old Mutual Investment Group, NICO Asset Managers Limited and National Bank of Malawi Plc;

j. The audited financial statements of Airtel for the five financial years ended 31 December 2014 to 2018 and six months ended 30 June 2019 and the auditors’ reports thereon;

k. The Reporting Accountants’ Report on the Profit Forecast and the historic results of Airtel;

l. A written statement signed by the reporting accountants setting out the adjustments made by them in arriving at the figures shown in their report giving the reasons therefor;

m. Copies of special resolutions;

n. Statement of legal compliance;

o. Airtel’s Licence;

p. Letters of appointments of directors; and

q. Written consents of advisers.

8.2. Pending Litigation

Airtel is currently involved in litigation proceedings. As at 30 June 2019 the Company was a defendant in several lawsuits. The plaintiffs are claiming damages and interest thereon for the loss caused by the Company. The Company has filed counter-claims against the plaintiffs. The total demand amount claimed in the various lawsuits approximates MWK4,381 million. In the opinion of the Directors and Company’s legal counsel, no material liabilities are expected to crystallize from these law suits. Consequently, a provision of MWK1,090 million has been made against claims which are probable, to be against the company, and same included in the financial statements.

Following the MRA tax audit on Airtel’s financial records for the period January 2013 to January 2016, there were several charges made against Airtel. The MRA has made claims of additional tax to be paid of MWK5.2 billion, of which MWK2.4 billion is additional tax and MWK2.8 billion as interest and penalties. The charges were contested and subsequently MRA revised the claims of additional tax to MWK1.0 billion and penalty to MWK1.4 billion.

The additional tax of MWK1.0 billion has been conceded and paid and same included in the financial statements. An application to waive the interest and penalties has been made to MRA. No provision relating to interest and penalty has been made.

The estimated litigation material claims have not during the preceding 12 months, had a significant effect on the financial position of the Company, nor is the Board aware that any such proceedings are pending or threatened. 

8.3. Borrowings

Airtel has the following borrowings in line with Section 6.1.12

Lender Type of facility Amount applied for Tenor Pricing Amount outstanding

Bharti Airtel International BV cum Bharti Airtel Malawi Holdings BV

Unsecured term loan

USD 78.04 million 6 years Libor plus 450 bps USD19 million

Bank of America NA, Hong Kong

Unsecured revolving credit facility

USD40 million 2 years 3 months Libor plus 105 bps

USD40 million

8.4. Material Adverse Change

There have been no material changes in the trading or financial position of Airtel in the last three financial years.

8.5. Material contracts

There are no material contracts outside the ordinary course of business currently in force or which have subsisted during the prior two years.

Pre-Listing Statement - Con’t

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8.6. Material property leases and location of principal Investments

The continuity of Airtel’s business is assured. A schedule of Airtel’s material properties/ leases and the location of its main data switch and back up appears below: -

Name Area (hectares) Rental per annum MWK

Last date of effective lease

Remaining lease term years

Head Office- Bwaila 40/32* 0.5303 hectares 100 17/05/2075 57 years lease

Head Office- Bwaila 40/33** 0.5649 hectares 100 17/05/2075 57 years lease

Limbe Branch Chichiri 1019 0.2771 hectares N/A Freehold

Plot 49/1/2120*** TBA Lease with Malawi Housing Corporation under negotiations

*MWK100 – per annum to be paid to government as per lease certificate attached to this property

** MWK100 – per annum to be paid to government as per lease certificate attached to this property

***There is no agreed rent as of now as the issue is under discussion between Airtel and MHC. 

9. CORPORATE INFORMATION

Registered office of the Company

Airtel Malawi Plc Airtel Complex City Centre Off Convention Drive P.O Box 57 Lilongwe Malawi Tel +265 (0) 999 901 300

Lead Transaction Advisor

Standard Bank Plc Standard Bank Centre African Unity Avenue

P.O. Box 30380 Lilongwe, MalawiTel +265 (0) 1 774 688

sbm@standardbank.co.mw

Legal Advisor

Sacranie Gow & Company Realty HouseChurchill Road PO Box 5133 Limbe

Tel +265 (0) 1 840 311Fax +265 (0) 1 840 750

sgow@sacgow.com

Reporting Accountant

Deloitte PCL House

Kaohsiung RoadP.O. Box 187 Blantyre, Malawi

Tel + +265 (0) 1 822 277bt@deloitte.co.mw

Sponsoring Broker

Stockbrokers Malawi Limited NBM Towers

Corner Hannover Avenue and Henderson Street P.O. Box 31180Blantyre, Malawi

Transfer Secretary

Standard Bank Plc Standard Bank Regional Office

Victoria AvenueP.O. Box 1111 Blantyre, Malawi

Tel +265 (0) 1 820 144sbm@standardbank.co.mw

Principal Banker

Ecobank HouseCorner Victoria Avenue and Henderson Street

Private Bag 389Chichiri, Blantyre

Tel: 265(0)1 822 099/(0)1 822 099

Receiving Bank

Standard Bank Plc Standard Bank Centre African Unity Avenue

P.O. Box 303a5 (0) 1 774 688sbm@standardbank.co.mw

Receiving Bank

National Bank of Malawi PlcNBM Towers

7 Henderson Street P.O. Box 945Blantyre

Tel. +265 (0) 1 820 622

Receiving Bank

First Capital Bank PlcLivingstone Towers

Glyn Jones RoadPrivate Bag 122, Blantyre Tel+ 265 (0) 1 821 955

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Transfer Secretary

Standard Bank Plc Standard Bank Regional Offi ce

Victoria AvenueP.O. Box 1111 Blantyre, Malawi

Tel +265 (0) 1 820 144sbm@standardbank.co.mw

Receiving BankReceiving Bank

FDH Bank LimitedUmoyo House,

No.8 Victoria Avenue NorthP.O. Box 512 Blantyre, Malawi

Tel +2651820219 Info@fdh.co.mw

Receiving Bank

NBS Bank Plc NBS House

Corner Chipembere Highway & Johnstone Roads

P.O. Box 32251 Blantyre, MalawiTel +265 (0) 1 876 222

Receiving Agent

moneyAirtel Mobile Commerce Limited

Airtel Complex City CentreOff Convention Drive

P.O Box 57 Lilongwe MalawiTel +265 (0) 999 901 300

Underwriter

Old Mutual Investment Group Limited Old Mutual Building30 Glyn Jones Road

P.O. Box 393 Blantyre, MalawiTel +265 (0) 1 820 677

Underwriter

NICO Asset Managers LimitedChibisa House

19 Glyn Jones RoadP.O. Box 3173 Blantyre, Malawi

Tel +265 (0) 1 832 085 invest@nicoassetmanagers.com

Underwriter

National Bank of Malawi Plc7 Henderson Street

P.O. Box 945 BlantyreTel. +265 (0) 1 820 622

Auditors

Deloitte HouseOff Independence Drive

P.O. Box 30364 Lilongwe, MalawiTel + +265 (0) 1 773 699

ll@deloitte.co.mwChartered Accountants Registered with the Institute

of Chartered Accountants in Malawi (ICAM)

10. PUBLIC OFFER

For the purpose of the Initial Public Off er, copies of the Prospectus may be collected from the Receiving Banks branches or from the offi ces of the Sponsoring Broker or the Company as indicated in Section 9 of this Pre-Listing Statement. Electronic copies of the Prospectus can also be obtained from the Company’s website at www.airtel.mw.

11. RESPONSIBILITY FOR THE PRE-LISTING STATEMENT

The Directors, whose names appear in Section 7 collectively and individually, accept full responsibility and liability for the accuracy of the information given in this Pre-Listing Statement and certify that, having made all reasonable inquiries, that, to the best of their knowledge and belief, there are no other facts the omissions of which would make any statement in this Pre-Listing Statement misleading and have duly authorized the undersigned to sign this declaration on their behalf.

Signed on 9th December 2019 by or on behalf of Airtel pursuant to the resolution of the Board dated 9th December 2019.

Plastone Alex Chitsime Charles Mustafa KamotoChairman Managing Director

Pre-Listing Statement - Con’t

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Pre-Listing Statement - Con’t

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Airtel Malawi Plc Airtel Complex City Centre Off Convention Drive P.O Box 57 Lilongwe Malawi Tel +265 (0) 999 901 300